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JAZZ vs. ZTS: Which Stock Is the Better Value Option?

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Investors interested in Medical - Drugs stocks are likely familiar with Jazz Pharmaceuticals (JAZZ - Free Report) and Zoetis (ZTS - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, both Jazz Pharmaceuticals and Zoetis are sporting a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. However, value investors will care about much more than just this.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

JAZZ currently has a forward P/E ratio of 9.41, while ZTS has a forward P/E of 36.75. We also note that JAZZ has a PEG ratio of 0.83. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. ZTS currently has a PEG ratio of 3.17.

Another notable valuation metric for JAZZ is its P/B ratio of 2.77. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, ZTS has a P/B of 23.60.

These are just a few of the metrics contributing to JAZZ's Value grade of A and ZTS's Value grade of C.

Both JAZZ and ZTS are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that JAZZ is the superior value option right now.


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Jazz Pharmaceuticals PLC (JAZZ) - free report >>

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